ONTARIO
SUPERIOR COURT OF JUSTICE
FORT FRANCES COURT FILE NO.: CV-05-0056
DATE: 2013-06-28
B E T W E E N:
MARY JANE PEARSON and ROSS PEARSON,
Robert G. Zochodne, for the Plaintiffs
Plaintiffs
- and -
THE CORPORATION OF THE TOWN OF FORT FRANCES,
Eugene Prpic, for the Defendant
Defendant
HEARD: June 17, 2013.
J. dep. Wright, J.
Decision On Costs
[1] I have been asked to fix the costs of this action and prejudgment interest. The plaintiffs, the Pearsons, were successful in recovering the sum of $232,500 in an action for negligence against the municipality.
[2] In the eyes of the plaintiffs this was a very simple case. A municipal storm sewer ran through an easement on the plaintiff's land. As a result of a landslide in the plaintiff's backyard in 2001 the plaintiffs warned the defendant that this had been caused by a break in its drainage pipe. Representatives of the city informed the plaintiffs that if there was a break in the pipe it would be repaired and remedial steps would be taken with respect to their landslide. The pipe was dug up, a break was found, but the city declined responsibility. The court has now imposed liability upon the municipality. The plaintiffs have incurred very substantial expenses. They wish to be reimbursed.
[3] Unfortunately for the plaintiffs the case was not as open and shut as they saw it. Having determined that there was a gap in the pipe the issue became one of cause and effect. Did the gap cause the slide or did the slide cause the gap?
[4] Equally unfortunately for the plaintiffs the law does not ordinarily reimburse successful litigants for their actual expenses. The general rule is that successful parties are entitled to partial recovery of their legal fees together with expenses such as those of expert witnesses whose presence was reasonably necessary and whose expenses are reasonable under the circumstances. The tariff suggests a limit of $350 a day as the amount an unsuccessful party should contribute for the costs of an expert. This amount is subject to increase.
[5] The principle of partial indemnity of costs is expressed in the adage "the winner loses once, the loser loses twice”.
[6] In approaching these issues counsel, each of whom is experienced in these matters, agree:
(1) that as successful parties the plaintiffs are entitled to costs;
(2) that having served an offer to settle for an amount less than the amount recovered by the judgment the plaintiffs became entitled to costs on a substantial indemnity basis from the date of that offer being October 21, 2011;
(3) that although the trial extended over eleven days costs may be dealt with as a nine day trial; and
(4) that subject to specific exceptions, the basic hourly rate of billing may be taken to be $300 per hour.
[7] The precipitating incidents in this action took place on July 30, 2001 and June 8, 2002.
[8] The assessment of costs is somewhat complicated by the fact that the plaintiffs had two counsel successively. Counsel changed in March 2011, just weeks before a scheduled trial date. This necessitated the abandonment of that trial date and a certain amount of duplication of effort by the new counsel.
CALCULATION ON THE BASIS OF TIME SPENT
[9] One way to approach the issue of costs is to multiply the rate of reimbursement by a reasonable time factor. There are at least three different rates of reimbursement that can be considered. There is the “standard” hourly rate of reimbursement for counsel of record which we call “partial indemnity”. There is the extraordinary hourly rate of reimbursement which we call “substantial indemnity”. This rate of reimbursement was triggered by the plaintiffs’ willingness to settle the action for a sum less than the amount eventually recovered. Then there is the rate of reimbursement which we call “counsel fee at trial” which, in this case, would be assessed on a substantial indemnity basis.
[10] What should the standard hourly rate of indemnity be? Counsel say $300. If the billing rate was $300 an hour I am prepared to proceed on the basis that the partial indemnity rate would be $180 an hour or 60% of the total . Since the substantial indemnity rate is usually 1.5 of the partial indemnity rate (R.1.03) the substantial indemnity rate would be $270. For purposes of this case I accept that counsel fee at trial on a substantial indemnity basis would be $2,430 per day or 6 x$270 + 1/2 of this again.
Pleadings
[11] The plaintiff claims $5,700 for pleadings. For purposes of an hourly rate times hours approach I suggest $3,600. I make this reduction on the basis that the pleadings were amended. That amendment was necessitated by the joinder of municipal employees in the original statement of claim contrary to the provisions of a statute. In addition to this the pleadings were prepared six or seven years ago when, as I can take judicial notice, solicitor’s fees were somewhat less than they are today.
Discovery
[12] The plaintiff claims $15,080 based upon 75.4 hours. The defense accepts those hours. Assume we allow $13,572 for 75.4 hours x $180 an hour.
Pretrial
[13] The first counsel claimed $4,280 for 21.4 hours. Accepting the time stated gives us $3,852 at $180 per hour. The second counsel claimed $2,880 for 14.4 hours. Assume $2,592.
Trial preparation (before offer)
[14] The plaintiff claims for the first counsel the sum of $14,040. Assume we allow $4,500 for 25 hours. I understand that the first counsel prepared a trial brief consisting of a synopsis of the discoveries and tentative questions for each witness and that as a result all of the first counsel’s trial preparation was not lost.
[15] With respect to the second counsel the amount claimed is $4,580. There is an element of duplication that it is unfair to expect the defendant to pay. The plaintiffs reduced the original amount claimed in recognition of this factor but a further reduction is warranted because of the change of counsel. I proceed on the basis of $4,140.
After Offer
[16] The offer to settle was served October 21, 2011. The trial began November 28, 2011. During this time period the solicitor is said to have devoted 115 hrs. to the preparation of this case. This would be almost all of his professional time for the period. This comes to $31,050 at $270. In addition to this a young lawyer is said to have spent 26.3 hours. At a billing rate of $140 the substantial indemnity rate would be $126.00 for a total of $3,314.
Counsel Fee At Trial
[17] Work done during the course of trial is usually considered to be part of the counsel fee.
[18] My approach to counsel fee at trial is to multiply the substantial indemnity rate ($270) by 6 and add half again. By my calculation this comes to $2,430 per diem x 9 or $21,870.
Travel Time
[19] Allowance for travel time is discretionary. If clients wish to retain counsel outside the district they may not be able to insist upon the losing party contributing to this additional cost. In this case I am satisfied that travel time was warranted. I allow it at half the substantial indemnity rate, it having been incurred after the offer. Total: 21 hrs. @ $135 being $2,835.
COSTS
[20] Assume we allow $2,700 for preparation and attendance on the motion for costs.
[21] On this approach fees would amount to $94,025. This seems to be an excessive amount for a trial like this.
[22] The fixing of costs is not a mechanical exercise based solely upon a calculation of hours and rates. It involves a consideration of a number of factors set out in Rule 57.01 to determine what is appropriate in the circumstances. The objective is to fix costs in an amount that the court considers fair and reasonable for the unsuccessful party to pay in a particular proceeding rather than what the actual costs were of the successful litigant: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.); Zesta Engineering v. Cloutier (2002), 2002 45084 (ON CA), 164 O.A.C. 234, [2002] O.J. No. 3738 (C.A.); Moon v. Sher, (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440, [2004] O.J. No. 4651 (C.A.). see 1483677 Ontario Ltd. V. Crain 2010 ONSC 1353, [2010] O.J. No 886 (SG Himel,J) ¶ 14
[23] R.57.01 provides in part:
(1) In exercising its discretion under section 131 of the Courts Of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed
[24] To test reasonableness another approach might be to take the total trial time 9 days x 6 hrs = 54 hrs. and assume that 5 hrs. of preparation and other time should be allowed for every hour in court on this trial. This gives us a total of 270 hours. (54 x 5).
Assume that 70 of those hours are substantial indemnity. 70 x $270 = $18,900
Assume that 200 of those hours are partial indemnity. 200 x $180 = $36, 000
Counsel fee at trial $21,870
This would give us a total of $76,770.
[25] This strikes me as being more reasonable for this trial.
[26] This case was legally uncomplicated. It depended upon the facts as supported by the experts. There are sizable experts’ fees as a result.
EXPENSES
Experts fees
[27] The defendant argues that the rates charged by Mr. Fabius and Mr. Peterson ($300 an hour) were too high compared to what other experts in the case charged.
[28] I accept the submissions of the defendant that the claim to be reimbursed for the rates charged by Mr. Fabius and Mr. Peterson ($300/hr) is too high compared to what other experts in the case charged and that the claim for them should be reduced to $200/hr which reduces the amount of the DST accounts by 1/3 to 36,000. I do not agree that any further reduction of the claim should be allowed.
[29] In the result I fix:
fees at $76,770 plus taxes.
disbursements at $63,909.
Pre-judgment Interest
[30] The parties agree that the relevant rate of pre-judgment interest is 2.8%. They dispute the duration.
[31] They are prepared to assume that:
2002 August 1 cause of action arose
2005 August 4 notice of action issued
2006 March 21 Statement of Claim served
2007 March 14 final Statement of claim delivered
2010 Nov 22 trial adjourned by plaintiff
2011 March 28 trial adjourned by plaintiff
2011 Nov 28 trial began
2013 March 18 judgment paid.
[32] S. 128(1) of the Courts Of Justice Act provides that:
A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.
[33] S.130(1)(C) provides
The court may, where it considers it just to do so. . . .
(c ) allow interest for a period other than that provided . . .
[34] The defendant’s position is that the plaintiffs took an unreasonable amount of time to commence this proceeding. The defendant notes that although the final damage-causing event occurred in June of 2002 a notice of action was not issued until August 4 2005 and the final version of the plaintiff’s claim was not served until March 14, 2007.
[35] The defendant also claims that the trial was adjourned twice as a result of the actions of the plaintiffs and their counsel.
[36] I agree in principle with the submissions of the defendant. Litigants are to be encouraged to move their claims along. They should not be lulled into thinking that their cause of action is like money in the bank collecting interest.
[37] I allow interest for the period:
4 Jan 2005 to 21 March 2006 say 14 months
14 March 2007 to 22 Nov 2010 say 44 months
28 Nov 2011 to 18 March 2013 say 16 months
Total 74 months.
[38] Judgment to issue for:
(1) Costs of $140,674
(2) Appropriate taxes to be agreed upon
(3) Pre-judgment interest on $232,500 @ 02.8% for 74 months
___”original signed by”
The Hon. Mr. Justice J. deP. Wright
Released: June 28, 2013
FORT FRANCES COURT FILE NO.: CV-05-0056
DATE: 2013-06-28
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MARY JANE PEARSON and ROSS PEARSON
Plaintiffs
- and –
THE CORPORATION OF THE TOWN OF FORT FRANCES
Defendant
DECISIONS ON COSTS
J. deP. Wright J.
Released: June 28 2013
final
/mls